Annual report pursuant to Section 13 and 15(d)

PENSION AND OTHER POSTRETIREMENT PLANS

v3.23.3
PENSION AND OTHER POSTRETIREMENT PLANS
 12 Months Ended
Sep. 30, 2023
Retirement Benefits [Abstract]  
PENSION AND OTHER POSTRETIREMENT PLANS PENSION AND OTHER POSTRETIREMENT PLANS:
The Company provides defined benefit pension and other postretirement plans to certain employees. Effective January 1, 2014, the Company's principal defined benefit retirement plan ("DB Plan") was closed to new participants. As of September 30, 2023 and 2022, all of the Company's defined benefit plans are unfunded.

In April 2021, the Committee approved resolutions to freeze all future benefit accruals for all participants in the Company's non-qualified Supplemental Retirement Plan ("SERP") and the defined benefit portion of the Officers Retirement Restoration Plan (“ORRP”), effective April 30, 2021. In August 2021, the Committee approved the termination of the SERP and the defined benefit portion of the ORRP. In September 2021, the Company notified SERP and ORRP participants of its intention to fully settle the obligations of the SERP and ORRP in early fiscal 2023.

In August 2021, the Company's Board of Directors approved the freeze of all future benefit accruals for the Company's DB Plan, effective September 30, 2021, and the planned termination of the DB Plan in early fiscal 2022. At such time, the Company notified all plan participants of the Company's intentions to terminate and fully settle the obligations of the DB Plan early in fiscal 2022.

The freezing of the DB Plan, SERP, and ORRP triggered curtailments, which resulted in the remeasurement of the projected benefit obligations and the immediate recognition of prior service costs in earnings in fiscal 2021, which were previously included within AOCI.

In the first quarter of fiscal 2022, the Company terminated its DB Plan and made plan contributions totaling $35,706 to fully fund the planned settlement of the DB Plan obligations. Also during the first quarter of fiscal 2022, lump sum distributions of $185,958 were made from the DB Plan to plan participants, and non-participating annuity contracts totaling $56,274 were purchased by the DB Plan for plan participants, resulting in the full settlement of the DB Plan obligations. The settlement of the DB Plan obligations resulted in the recognition of a non-cash charge of $30,856, which has been presented as a component of other income (deductions), net for the year ended September 30, 2022. This amount represents the immediate recognition of the remaining portion of the deferred AOCI balances related to the DB Plan.

In the first quarter of fiscal 2023, the Company made lump sum payments totaling $24,242 to fully settle the SERP and defined benefit portion of the ORRP obligations. The settlement of these plan obligations resulted in the recognition of a non-cash charge of $1,271, which has been presented as a component of other income (deductions), net for the year ended September 30, 2023. This amount represents the immediate recognition of the deferred AOCI balances related to the SERP and ORRP. During fiscal 2023, the remaining funds held in a rabbi trust associated with the SERP were transferred to the Company. Consequently, these amounts are no longer classified as restricted cash.
The following provides a reconciliation of benefit obligations, plan assets and funded status of the plans as of the Company's actuarial valuation as of September 30, 2023 and 2022:
  Pension Other Postretirement
  2023 2022 2023 2022
Change in benefit obligation:
Benefit obligation, beginning of year $ 36,609  $ 293,926  $ 12,813  $ 18,841 
Acquisitions (1)
—  9,829  —  — 
Service cost 163  392  76  165 
Interest cost 497  1,127  644  411 
Actuarial gain (512) (19,978) (641) (5,989)
Settlement (24,242) (242,232) —  — 
Exchange loss (gain) 979  (3,093) —  — 
Benefit payments (598) (3,362) (517) (615)
Benefit obligation, end of year (2)
12,896  36,609  12,375  12,813 
Change in plan assets:        
Fair value, beginning of year —  208,344  —  — 
Actual return —  368  —  — 
Benefit payments (598) (3,362) (517) (615)
Employer contributions 24,840  36,882  517  615 
Settlement (24,242) (242,232) —  — 
Fair value, end of year —  —  —  — 
Funded status (12,896) (36,609) (12,375) (12,813)
Unrecognized actuarial (gain) loss (1,518) 5,140  (5,906) (5,973)
Unrecognized prior service (credit) cost —  (4,815) (956) (1,320)
Net amount recognized $ (14,414) $ (36,284) $ (19,237) $ (20,106)
Amounts recognized in the consolidated balance sheet:        
Current liability $ (68) $ (24,172) $ (876) $ (830)
Noncurrent benefit liability (12,828) (12,437) (11,499) (11,983)
Accumulated other comprehensive (income) loss (1,518) 325  (6,862) (7,293)
Net amount recognized $ (14,414) $ (36,284) $ (19,237) $ (20,106)
Amounts recognized in accumulated        
       other comprehensive (income) loss:
       
Net actuarial (gain) loss $ (1,518) $ 5,140  $ (5,906) $ (5,973)
Prior service (credit) cost —  (4,815) (956) (1,320)
Net amount recognized $ (1,518) $ 325  $ (6,862) $ (7,293)
(1) Fiscal 2022 reflects benefit obligations assumed in connection with the acquisition of OLBRICH and R+S Automotive. For additional information, see Note 21.
(2) Gains and losses related to changes in assumptions (e.g., discount rate, mortality, etc.), asset, salary and other experience, and curtailments impacted benefit obligations.
Based upon actuarial valuations performed as of September 30, 2023 and 2022, the accumulated benefit obligation for the Company's defined benefit pension plans was $12,896 and $36,609 at September 30, 2023 and 2022, respectively, and the projected benefit obligation for the Company's defined benefit pension plans was $12,896 and $36,609 at September 30, 2023 and 2022, respectively.

Net periodic pension and other postretirement benefit cost for the plans included the following:
  Pension Other Postretirement
  2023 2022 2021 2023 2022 2021
Service cost $ 163  $ 392  $ 7,919  $ 76  $ 165  $ 201 
Interest cost * 497  1,127  6,145  644  411  376 
Expected return on plan assets * —  (1,040) (10,809) —  —  — 
Amortization:            
Prior service cost —  (152) (127) (364) (364) (364)
Net actuarial (gain) loss * (64) 469  9,769  (708) —  — 
Curtailment gain * —  —  (220) —  —  — 
Special termination benefits * —  —  315  —  —  — 
Prior-service cost write-offs * —  —  261  —  —  — 
Settlement* 1,271  30,856  —  —  —  — 
Net benefit cost $ 1,867  $ 31,652  $ 13,253  $ (352) $ 212  $ 213 
* Non-service components of pension and postretirement expense are included in other income (deductions), net.

Matthews has elected to utilize a full yield curve approach in the estimation of the service and interest cost components of net periodic benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.

Benefit payments under the Company's DB Plan were made from plan assets, while benefit payments under the SERP were made from the Company's operating funds. Benefit payments under the Company's postretirement benefit plan are made from the Company's operating funds.

Contributions made in fiscal 2023 are as follows:
Contributions Pension Other Postretirement
Supplemental retirement plan $ 23,469  $ — 
Other retirement plans 1,371  — 
Other postretirement plan —  517 

The weighted-average assumptions in the following table represent the rates used to develop the actuarial present value of the projected benefit obligation for the year listed and also the net periodic benefit cost for the following year. The measurement date of annual actuarial valuations for the Company's pension and other postretirement benefit plans was September 30, for fiscal 2023, 2022 and 2021.  The weighted-average assumptions for those plans were:
  Pension
  
Other Postretirement   
  2023 2022 2021 2023 2022 2021
Discount rate 4.13  % 4.01  % 2.79  % 5.86  % 5.37  % 2.83  %
Return on plan assets —  % —  % 3.10  % —  —  — 
Compensation increase —  % —  % 3.50  % —  —  — 
In October 2014, the Society of Actuaries' Retirement Plans Experience Committee ("RPEC") released new mortality tables known as RP-2014. Each year, RPEC releases an update to the mortality improvement assumption that was released with the RP 2014 tables. The Company considered the RPEC mortality and mortality improvement tables and performed a review of its own mortality history to assess the appropriateness of the RPEC tables for use in generating financial results. In October 2019, the Society of Actuaries released updated base mortality tables denoted PRI-2012, replacing the RP-2014 base tables. In fiscal years 2023, 2022 and 2021, the Company elected to value its pension and other postretirement benefit plan liabilities using the base PRI-2012 mortality table and a slightly modified fully generational mortality improvement assumption. The revised assumption uses the most recent RPEC Scale MP mortality improvement table for all years where the RPEC tables are based on finalized data, and the most recently published Social Security Administration Intermediate mortality improvement for subsequent years.

Benefit payments expected to be paid are as follows:
Years ending September 30: Pension Benefits Other Postretirement Benefits
2024 $ 616  $ 876 
2025 623  896 
2026 628  910 
2027 637  893 
2028 650  893 
2029-2033 3,499  4,287 
  $ 6,653  $ 8,755 

For measurement purposes, a rate of increase of 7.0% in the per capita cost of health care benefits was assumed for 2024; the rate was assumed to decrease gradually to 4.0% for 2073 and remain at that level thereafter.  Assumed health care cost trend rates have a significant effect on the amounts reported.

The Company sponsors defined contribution plans for hourly and salary employees. The expense associated with the contributions made to these plans was $13,297, $12,442, and $9,186 for the fiscal years ended September 30, 2023, 2022 and 2021, respectively. The Company also provides a non-qualified deferred compensation plan for certain executives that permits participants to defer an amount of income into the plan during each calendar year. The expense associated with the contributions made to this plan was $1,385 for the fiscal year ended September 30, 2023.